Owning a small business can be filled with many unknowns and risks for the owners, especially in the current economy. With new or expanding small businesses being the largest source of private employment, many economic development experts are relying on building companies locally instead of the traditional model of recruiting large corporations to the community.
Today, many businesses are struggling to stay afloat because of troubles in the financial services industry, which have led to more-restrictive lending policies. In late winter and early spring, the St. Louis Fed’s Community Affairs department helped address the financing needs of small business by gathering key stakeholders to share their perspectives on lending matters.
The St. Louis Fed’s meetings helped identify credit gaps in small-business financing and gathered information on regional differences in access to credit. Participants included representatives from community and national banks, political offices, and community and business groups from the Little Rock, Louisville, Memphis and St. Louis zones. The key takeaways were similar, as participants generally agreed on the following:
Findings from these local meetings are being combined with information collected from around the country. As a result of what the Fed learned, the Fed’s Board of Governors in August will share the findings and best practices and discuss future actions. In the Eighth District, the next step will be to bring together lenders, technical-assistance providers and alternative financial providers to explore the possibility of developing a loan fund for the St. Louis region. Several meeting participants have expressed their interest in being part of the ongoing dialogue.
When Will Business Lending Pick Up?
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Fed in Print: An index of the economic research conducted by the Fed.